GOP sees expanded gambling as state budget solution

Originally published December 5, 2011 at 8:00 pm
Updated December 6, 2011 at 9:36 am

Cecilia Johnson, second from right, waits for a customer as she deals cards at a Spanish 21 table Friday at the Iron Horse Casino in Auburn.

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Republicans say they have an alternative to Democrat-proposed tax increases to help balance the Washington state budget. They want to let nontribal casinos offer the same slot machines as tribal casinos, with the state getting a piece of the revenue.

OLYMPIA — Republican lawmakers steadfastly opposed to any tax increases suggested by Democrats say they have other ideas for raising money to help plug a $2 billion state budget shortfall.

Their biggest proposal on the table: gambling.

Republican leaders want to let nontribal casinos offer the same slot machines as tribal casinos, with the state receiving a cut of the revenue. Advocates say it would bring in nearly $160 million next fiscal year and $380 million in the subsequent two years, although the Governor’s Office questions those numbers.

“This to me seems like a pretty lucrative option,” said Rep. Gary Alexander, R-Olympia, ranking Republican on the House Ways and Means Committee. “Besides generating significant amounts of money, it also hits the other major issue we’re addressing, and that is putting people back to work.”

Republicans say they want to help level the playing field for small, nontribal gambling halls that struggle to compete with glitzy tribal casinos.

Democrats, who have been saying “everything is on the table” when it comes to balancing the state budget, seem inclined to leave this idea in the freezer. Democrats control the House, Senate and Governor’s Office.

Gov. Chris Gregoire doesn’t see the proposal going anywhere. “If I had my way,” she said, “we would not have any gambling in Washington state at all, on or off reservation.”

The GOP grumbles that Democrats don’t want to anger the tribes, who are big political contributors.

The state Democratic Party alone received about $1 million in direct contributions from the tribes between 2004 and 2010. The state Republican Party received $4,500.

The tribes say they will fight any legislation that tries to break their monopoly on electronic gambling machines.

In 2004, voters rejected with more than 61 percent of the vote an initiative that would have allowed as many as 18,000 new electronic slot machines in nontribal casinos, bars, restaurants and bowling alleys.

“Washington voters have spoken loud and clear that they are comfortable with this kind of gaming being limited in tribal facilities, and I would hope they would look at those past votes,” Cladoosby said.

No revenue from tribes

House and Senate Republicans say they plan to introduce bills in both chambers as soon as this week that would allow a limited number of electronic slot machines in 60 existing licensed cardrooms, with a maximum of 7,875 machines statewide.

Alexander said he planned to meet with representatives from several tribes Tuesday in Olympia to discuss the legislation.

“If you are going to have gambling, it should be equal between non-Indian and Indian,” said Sen. Jerome Delvin, R-Richland, who plans to sponsor legislation in the Senate.

Delvin and others note the state does not receive a cut of the money the tribes make from their 28 casinos. Nontribal casinos pay local gambling taxes as well as business-and-occupation taxes — but tribes do not.

The state Gambling Commission said it knows of 24 states that have tribal gaming. Ten have some type of revenue sharing with the tribes.

Under their gambling compacts negotiated with the state, tribes are required to spend some of their revenues on smoking cessation, problem gambling, impact fees, and charitable contributions in their communities. But there is no revenue sharing.

State records show tribal casinos had an estimated $1.95 billion in net receipts in fiscal year 2011, up from $1.57 billion in 2009.

Gregoire said she convened an emergency meeting of tribal leaders last month, at the request of Republicans, “to see if tribal leadership was interested in revenue sharing or something short of revenue sharing.”

The governor said 24 tribes were represented at the meeting in Kitsap County.

“I laid out the crisis that we’re in, and the cuts that I was going to make are going to impact not just all of the nontribal folks in the state, but the tribal folks,” she said.

The tribes were not willing to budge on revenue sharing, she said.

“Then I simply said, ‘Bottom line, is there anything you can do to help us?’ “

Gregoire said she’s still waiting for an answer.

No leverage over tribes

W. Ron Allen, chairman of the Washington Indian Gaming Association, said tribal leaders reminded the governor that under the gambling compacts, revenue sharing can’t be entered into without renegotiating the agreements and receiving Department of Interior approval.

Tribes also would not agree to revenue sharing without a guarantee of exclusivity — cutting other nontribal gambling out of the action, without any grandfathered operations, Allen said.

Further, he said tribal leaders reminded the governor that tribes have troubles of their own. Reducing gambling revenues they need to pay for their programs would shift budget problems to the tribes, Allen said.

Tribal leaders did pledge they would try to help fund services in their communities the state can’t afford, something some tribes already are doing, both Cladoosby and Allen said.

Last February the Tulalip Tribes donated $1.26 million to the Marysville School District to help it weather budget cuts, benefiting not only tribal students, but all 11,000 in the district.

Gregoire said the reality is the state has no leverage over the tribes when it comes to revenue sharing.

“If we got revenue sharing,” she said, “they’d have to get something in the deal. The court cases have been real clear about that. I don’t know what I have to give them, other than unfettered gaming.”

That’s something the governor said she’s unwilling to do.

60 percent threshold

There is nothing to stop the state from allowing slot machines in nontribal casinos, except an apparent lack of votes.

Democrats say 60 percent votes in the House and Senate are necessary to approve an expansion of gambling — a threshold unlikely to be achieved.

Republicans, however, contend their proposal is not an expansion — machines would go only to existing nontribal casinos — and would require a simple majority vote.

Supporters say the popular slot machines would help keep those businesses afloat.

Chris Kealy, owner of the Iron Horse Casino in Auburn, said he once had 300 employees but is down to 92 full-time positions. It’s hard to compete with the Muckleshoot Casino — with more than 3,000 slot machines — only three miles down the road, he said.

Kealy said he would install 100 slot machines if the Legislature allowed it.

“For me personally,” he said, “it will save me from bankruptcy because I’m headed there otherwise. I’m definitely not in a good spot.”

Gregoire, however, said she’s not sure helping card rooms is in the state’s best interest.

“This state has taken a very reserved approach to gaming because we’re on cleanup committee,” she said. “We deal with the addiction that ensues. The people who lose all their money and come to us because they don’t have a dime to care for their families.

“I don’t know the state feels an obligatory role, like it does for small business, to do what it can to help those particular forms of business.”